Silver Forecast October 9, 2014, Technical Analysis

The silver markets fell initially during the session on Wednesday, but found enough support near the $17 level to turn things back around and form a positive candle. The candle is still within the shooting star from the previous day though, so it appears of the market is still going to struggle. Quite frankly, we believe that there is a significant amount of resistance at the $18 level, and between here and there we would sell any resistive candle that we see over the next several sessions. We believe the technically this market still wants to go down to the $15 level, and even though we had a nice bounce during the session on Wednesday, that has not changed in our opinion.

Looking at this market, you have to keep in mind that silver is not only precious metal, but it is also an industrial metal. Because of that, the fact that the Federal Reserve suggested in its minutes from the last meeting that there is serious concern about global growth, it does suggest a perhaps there will be a serious lack of demand from the industrial side. If that’s the case, silver been in less demand certainly isn’t going to help prices.

On top of that, the US dollar continues to strengthen overall, and even if the Federal Reserve looks to be farther away from tightening rates than originally thought, the reasoning is what’s important. After all, they didn’t suggest that the US economy was hurting, rather the global economy was. Because of that, it’s very likely that money will flood into the US dollar, especially when it comes to buying bonds. It’s a safety play, and that could work against the value of silver over the longer term. With that in mind, and the fact that we have broken down through so significant support, we think that eventually the silver markets will continue the bearish run that we have seen recently. With that, we believe that $15 is the next logical level, but we could see the market move down to the $12 level given enough time.